The simple percentage return of an investment over a specific period, without considering the time taken or compounding. Calculated as `((Ending Value - Starting Value) / Starting Value) * 100%`. Typically used for periods less than one year.

See Mutual Fund Distributor / Registered Investment Adviser (RIA).

A measure of a fund's performance relative to its benchmark index, after adjusting for risk. A positive alpha indicates the fund has outperformed its benchmark on a risk-adjusted basis, while a negative alpha indicates underperformance.

A company registered with SEBI that manages the investments of a mutual fund scheme. It appoints fund managers, conducts research, and handles the operational aspects of the fund.

The industry body for mutual funds in India. It works to develop the industry, promote best practices, increase investor awareness, and acts as a liaison between the industry, regulators (SEBI), and the government. It also issues ARN numbers to distributors.

A unique number issued by AMFI to individuals or entities qualified to act as Mutual Fund Distributors after passing the required NISM certification.

The strategy of dividing an investment portfolio among different asset classes, such as equities, debt, gold, real estate, etc., based on the investor's risk tolerance, goals, and time horizon. It's a key principle for diversification.

The total market value of all the financial assets that a mutual fund scheme or an AMC manages on behalf of its investors.

A type of hybrid fund that dynamically adjusts its allocation between equity and debt based on market valuations or predefined models. Aims to capture equity upside while cushioning downside risk.

A standard or index against which the performance of a mutual fund scheme is measured (e.g., Nifty 50, CRISIL Composite Bond Fund Index). Helps assess if the fund manager is generating alpha (outperformance).

A measure of a fund's volatility or systematic risk in relation to the overall market (represented by its benchmark). A beta of 1 means the fund tends to move with the market. Beta > 1 indicates higher volatility than the market, and Beta < 1 indicates lower volatility.

Blue chip stocks are shares of large, well-established, financially sound companies with a history of stable earnings. Blue Chip Funds (a type of Large Cap Fund) primarily invest in these stocks.

A fixed-income instrument representing a loan made by an investor to a borrower (typically corporate or governmental). The borrower pays periodic interest (coupon) and repays the principal amount at maturity. Mutual funds investing in bonds are called Debt Funds.

The average annual rate of return generated by an investment over a specified period longer than one year, assuming the profits are reinvested. It provides a smoothed-out measure of return.

The profit realised from the sale (redemption) of mutual fund units when the selling price (NAV) is higher than the purchase price. Categorized as Short-Term Capital Gain (STCG) or Long-Term Capital Gain (LTCG) based on the holding period, with different tax implications.

A mutual fund scheme with a fixed number of units issued during a New Fund Offer (NFO) and a fixed maturity date. After the NFO, units are typically traded on stock exchanges rather than being bought/sold directly from the AMC.

A single statement consolidating transaction details and holdings across all mutual fund schemes held by an investor across different AMCs, generated by RTAs (CAMS/KFintech).

In debt funds, this is the risk that the issuer of a bond or debt instrument may default on its interest payments or principal repayment obligations. Funds investing in lower-rated bonds carry higher credit risk.

The specific time by which an application for purchase, redemption, or switch must be received by the AMC/RTA to be eligible for the NAV of that business day. Applications received after the cut-off time get the NAV of the next business day.

A mutual fund that invests primarily in fixed-income securities like government bonds, corporate bonds, treasury bills, and money market instruments. Suitable for income generation and capital preservation, with lower risk than equity funds.

An account used to hold shares and securities in electronic (dematerialized) format. Generally not required for investing in open-ended mutual funds via SOA, but mandatory for trading ETFs or listed close-ended funds.

An investment option offered by mutual funds where investors buy units directly from the AMC without routing through a distributor. It has a lower expense ratio compared to the Regular Plan as no distributor commission is paid.

See Mutual Fund Distributor.

An investment strategy of spreading investments across different asset classes (equity, debt), sectors, market capitalizations, or geographical regions to reduce overall portfolio risk. The idea is that losses in one area may be offset by gains in another.

See IDCW (Income Distribution cum Capital Withdrawal).

A type of diversified equity mutual fund that offers tax benefits under Section 80C of the Income Tax Act. Investments have a mandatory lock-in period of 3 years.

A mutual fund that invests primarily in the shares (stocks) of companies. Aims for long-term capital appreciation and carries higher market risk.

A type of mutual fund (often passively managed, tracking an index) whose units are listed and traded on stock exchanges like individual stocks. Requires a Demat account for investment.

A fee charged by some mutual fund schemes if an investor redeems (sells) units before a predefined period from the date of investment. Expressed as a percentage of the NAV.

The annual fee charged by the AMC to manage the fund, expressed as a percentage of the fund's average AUM. It covers management fees, administrative costs, etc., and is deducted from the NAV daily.

An equity mutual fund category that can invest dynamically across large-cap, mid-cap, and small-cap stocks without minimum allocation restrictions to any specific market cap category.

A unique account number assigned by an AMC to an investor for all their investments within that fund house.

A mutual fund scheme that invests in the units of other mutual fund schemes instead of directly investing in stocks or bonds.

The investment professional employed by the AMC responsible for making investment decisions for a mutual fund scheme according to its stated objectives.

See AMC (Asset Management Company).

An option in a mutual fund scheme where profits (capital gains or income) earned by the fund are automatically reinvested back into the scheme, leading to NAV appreciation. No periodic payouts are made.

A mutual fund that invests in a mix of asset classes, typically equity and debt, according to its investment mandate.

Formerly known as Dividend Option. An option where the fund may periodically distribute profits (if available and decided by the AMC) to unitholders. The NAV drops by the amount distributed. IDCW is taxed in the hands of the investor as per their income tax slab.

A passively managed mutual fund that aims to replicate the portfolio and performance of a specific market index (e.g., Nifty 50, Sensex). Typically has a low expense ratio.

A benefit used for calculating Long-Term Capital Gains (LTCG) tax on certain assets (like debt funds purchased before April 1, 2023, held over 3 years) by adjusting the purchase cost upwards using the Cost Inflation Index (CII) to account for inflation, thereby reducing the taxable gain.

The risk that the value (NAV) of a debt fund will decrease if market interest rates rise. This happens because existing bonds with lower interest rates become less attractive compared to new bonds issued at higher rates. Longer-duration debt funds are more sensitive to interest rate changes.

The primary goal of a mutual fund scheme, such as capital appreciation, income generation, or capital preservation, as stated in its offer document. The fund manager invests according to this objective.

A mandatory process required by regulators for financial institutions to verify the identity and address of their clients before allowing investments. Required for all mutual fund investors.

An equity mutual fund that primarily invests in shares of large-cap companies (typically the top 100 companies by market capitalization in India).

A type of debt mutual fund investing in very short-term money market instruments with maturities up to 91 days. Offers high liquidity and relatively low risk, suitable for parking emergency funds or short-term surplus cash.

The risk that an investor may not be able to sell their investments quickly enough at a fair price due to lack of buyers in the market, or the fund manager may not be able to sell underlying securities easily to meet redemption pressures. Generally higher in close-ended funds or funds investing in illiquid securities.

A mandatory period during which investors cannot redeem their investments from a specific scheme. For example, ELSS funds have a 3-year lock-in period.

Profit from the sale of mutual fund units held for more than a specified period (12 months for equity-oriented funds, 36 months for debt funds purchased before April 1, 2023). Tax treatment varies based on asset type and investment date.

Investing a single, one-time amount into a mutual fund scheme, as opposed to investing smaller amounts periodically through SIP.

The total market value of a company's outstanding shares, calculated by multiplying the current share price by the total number of shares. Used to classify companies as Large Cap, Mid Cap, or Small Cap.

The risk that the value of investments (especially equities) will decrease due to overall market factors like economic downturns, political instability, or changes in investor sentiment. This risk cannot be eliminated through diversification alone.

An equity mutual fund that primarily invests in shares of mid-cap companies (typically companies ranked 101st to 250th by market capitalization in India).

An equity mutual fund category mandated to invest a minimum of 25% each in large-cap, mid-cap, and small-cap stocks.

An individual or entity registered with AMFI (holding an ARN) authorized to sell mutual fund schemes and provide related services to investors. They earn commissions from AMCs (included in the Regular Plan's expense ratio).

The per-unit market value of a mutual fund scheme's assets minus its liabilities. It represents the price at which investors buy or sell units in the fund. Calculated daily for open-ended funds.

The first-time subscription offer for units of a new mutual fund scheme launched by an AMC. Typically offered at a face value (e.g., ₹10 per unit) for a limited period.

An educational institute established by SEBI that conducts certifications and training programs for various securities market participants, including the mandatory certification (Series V-A) for Mutual Fund Distributors.

The facility allowing a unitholder to designate a person (nominee) who can claim the units or proceeds in the event of the unitholder's death.

Legal documents filed with SEBI that provide detailed information about a mutual fund scheme, including its investment objective, strategies, risks, costs, fund manager details, past performance (in SID), etc. Investors should read these carefully before investing. KIM is a summarized version of the SID.

A mutual fund scheme that is available for subscription (purchase) and redemption on an ongoing basis directly from the AMC at the prevailing NAV. Offers high liquidity.

A type of debt fund that invests in securities maturing in just one day. Considered the lowest risk category among mutual funds, suitable for parking very short-term funds.

A collection of all the investments (like stocks, bonds, mutual fund units) held by an individual investor or a mutual fund scheme.

An investment management service offered to High Net Worth Individuals (HNWIs) where a professional portfolio manager manages a customized portfolio of securities directly in the client's name (unlike mutual funds where assets are pooled). Subject to SEBI regulations and typically requires a higher minimum investment.

The act of selling mutual fund units back to the fund house (AMC) at the prevailing NAV. The investor receives the redemption proceeds in their registered bank account.

An individual or entity registered with SEBI under the Investment Adviser regulations, qualified to provide investment advice for a fee charged directly to the client. They generally cannot receive commissions from product manufacturers for the advice given.

An investment option in a mutual fund scheme where investments are made through a distributor or advisor. It has a slightly higher expense ratio than the Direct Plan due to the inclusion of distributor commissions.

A graphical representation mandated by SEBI that depicts the level of risk associated with a mutual fund scheme. It ranges from 'Low' to 'Very High' based on the underlying portfolio's risk characteristics.

An investment strategy, naturally achieved through SIP, where investing a fixed amount regularly results in buying more units when prices (NAV) are low and fewer units when prices are high. This can potentially lower the average cost per unit over time.

An agency appointed by AMCs to maintain records of unitholders, process transactions (purchase, redemption, switch), issue account statements, and handle other investor service functions. Major RTAs in India include CAMS and KFintech (formerly Karvy).

See Offer Document.

The regulatory body for the securities and commodity market in India, including the mutual fund industry. Its primary role is investor protection and market regulation.

An equity mutual fund that invests primarily in stocks of companies belonging to a specific sector of the economy (e.g., Banking, Technology, Pharmaceuticals, Infrastructure). Carries higher concentration risk.

A measure of risk-adjusted return. It indicates the excess return generated by a fund over the risk-free rate (like a government bond yield) per unit of total risk (measured by standard deviation). A higher Sharpe Ratio generally suggests better risk-adjusted performance.

Profit from the sale of mutual fund units held for less than or equal to the specified period (12 months for equity-oriented funds). Also applies to all gains from debt funds purchased on/after April 1, 2023, regardless of holding period. Taxed differently than LTCG.

A method of investing a fixed amount of money in a chosen mutual fund scheme at regular, predetermined intervals (e.g., monthly). Promotes disciplined investing and benefits from rupee cost averaging.

An equity mutual fund that primarily invests in shares of small-cap companies (typically companies ranked 251st onwards by market capitalization in India). Generally considered higher risk but with potential for higher growth.

A statement issued by the AMC or RTA confirming the details of transactions and the number of units held by an investor in a particular folio or scheme. Serves as proof of holding when units are not held in Demat form.

A statistical measure of the volatility or dispersion of a fund's returns around its average return. A higher standard deviation indicates greater volatility and risk.

A facility allowing investors to periodically transfer a fixed amount from one mutual fund scheme (usually a debt or liquid fund) to another scheme (usually an equity fund) within the same AMC. Helps in staggering investment into equity markets.

The process of redeeming units from one scheme and simultaneously investing the proceeds into another scheme within the same AMC. Tax implications apply as it involves a redemption and a purchase.

A facility allowing investors to withdraw a fixed amount from their mutual fund investment at regular intervals (e.g., monthly, quarterly). Useful for generating regular income, especially during retirement.

See ELSS (Equity Linked Savings Scheme).

Tax deducted by the payer (like an AMC for certain IDCW distributions or NRI redemptions) before making the payment to the recipient. The recipient can claim credit for TDS paid while filing their income tax return.

See Expense Ratio.

An equity mutual fund that invests in stocks related to a specific theme (e.g., Consumption, Infrastructure, ESG - Environmental, Social, Governance). Similar to sector funds but potentially broader, still carries concentration risk.

A recurring commission paid by the AMC to the mutual fund distributor based on the value of assets sourced by them and held by the investor in the scheme. It's part of the Regular Plan's expense ratio.

A physical or digital form used to request transactions like purchase, redemption, switch, SIP registration, etc.

An entity or board registered with SEBI that holds the assets of the mutual fund scheme in trust for the benefit of the unitholders. Their primary responsibility is to oversee the activities of the AMC and ensure compliance with regulations and protection of investor interests.

The smallest ownership part of a mutual fund scheme. Investors are allotted units based on the amount invested and the NAV at the time of investment.

The degree of variation or fluctuation in the price or returns of an investment over time. Higher volatility implies greater risk. Often measured statistically by Standard Deviation.